China food scare eats into sales at McDonald’s

McDonald's said its global sales forecast for 2014 was at risk after a food scare forced it to temporarily withdraw menu items such as Big Macs and Spicy McWings in China.

Shares of the world’s largest burger chain were down 0.6 per cent $92.77 premarket today.

McDonald's said this month that sales in markets, including China and Japan, were experiencing a "significant negative impact" following a local Chinese TV report on July 20th that showed workers at a supplier using expired meat and doctoring food production dates.

The company said in July it expected full-year global comparable sales to be “relatively flat” due to increased competition, pricing and other cost pressures. “However, as a result of the China supplier issue, the company’s global comparable sales forecast for 2014 is now at risk,” the company said today.

McDonald's said same-restaurant sales in Asia-Pacific, Middle East and Africa fell 7.3 per cent in July. Worldwide comparable sales at restaurants open at least 13 months fell 2.5 per cent last month. Analysts on average had expected a 1.1 percent fall, according to research firm Consensus Metrix.

The fast-food giant has been struggling in its home market, where tough competition from Wendy’s and Burger King, as well as sluggish job and wage growth, are hurting sales.

US same-restaurant sales fell 3.2 per cent in July. Those sales have been down or flat since November 2013. Analysts polled by Consensus Metrix had expected a 2.6 per cent fall in comparable sales in the United States.

Reuters